by Chris | If we lived in a dictatorship and
I were the dictator, I’d be an especially benign one. I’d let everyone live to age 100.
As a benign dictator, I’d also bequeath the following New Year’s resolutions to people age 50 and under. [Resolutions for people over 50 are here.]
1. Buying a House. If you are going to buy a house, use a conventional 30-year fixed-rate mortgage and make an extra payment yearly (better yet a 15-year fixed-rate mortgage). Keep your payment at or below 30% of your take home pay. Do you want such a high payment that you can’t enjoy life? Stay away from adjustable rate mortgages unless your financial planner, tax advisor and spiritual advisor give you the ok.
2. Credit Cards. Use your credit card as an alternative to cash: i.e., pay it off every month. Only a lunatic pays a 15%-plus interest rate. If you can’t pay for something outright, you probably don’t need it.
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3. Cars. Buy a good quality used car instead of
buying or leasing a new car. Cars are depreciating assets (they go down in value
quickly). If you really want to
lease a car, talk to your advisers mentioned in #1.
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4. Life Insurance. If you have debts and or a family, buy 10-
or 20-year level premium term life insurance policy. You need to be responsible enough to leave your family
comfortable after you die. Look on the
internet for insurance calculators and talk to your financial planner to
determine how much coverage you need. Double check with your employer’s benefits department to determine if
you can buy more through your group policy.
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5. Disability Insurance. Odd as this seems, you have a greater chance
of being disabled for a period than of dying prematurely. Check with your employer about disability
insurance and determine how much you need. Remember, if you are disabled you will likely need to pay bills (and
probably health care, too). Be generous
with your disability coverage.
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6. College Funds. If you have children, start saving for their
college early. Consider a 529 college
savings plan. Rather than buying your child one more gift that you will be
throwing out in a few years, ask your relatives to gift to it. Consult your financial planner, because
different states have different features & benefits.
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7. Emergency funds. Create an emergency fund of 3 months’ income
if you and your spouse both work -- or 6 months if there is only one person
employed outside the home. Remember
this is for emergencies.
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8. Retirement. Save, save, save for retirement. If my benign dictatorship is overthrown,
odds are you’ll live into your late 80’s or early 90’s -- and it’s a lot better to be old and rich
than old and poor. Maximize your
employer’s 401(k) retirement plan and consider a Roth IRA. Don’t be afraid of investing in equities but
do your homework and/or consult with an advisor.
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9. Wills. Talk to a lawyer about a will.
Christopher J. Conner
Certified Financial Planner TM
Certified Fund Specialist
Managing Director
5200 W. Newberry Road E-7
Gainesville, Florida 32607
352-225-3132 (Fax) 352-225-3784
Cell 352-281-4646
Advisory
Services offered through Jonathan Roberts Advisory Group.
Securities
offered through J.W. Cole Financial, Member FINRA/SIPC
3550
Buschwood Park Dr., Ste. 135, Tampa, FL 33618 (PH) 813-935-6776
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